In an economics driven and rationale society, the Hulk feeds on the myths, prejudices and suspicions that are flung his way.

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What’s more, having laid claim (sic) to the Indian commodity markets, the exchange is now gung-ho on its global plans. FTIL & MCX have a big stake in Middles East’s largest commodity bourse – the Dubai Gold and Commodities Exchange (DGCX) and through FTIL, MCX is also running exchange platforms in S. Africa and Mauritius; the latest initiative is to launch an exchange in Singapore. Well-placed sources within the company confirm that preparations are on in full swing and the Singapore exchange will go live in the first week of July. Once that happens, MCX may be well on its way to realise its global ambitions, that of becoming a leader for the entire Asian region. Massey told this magazine that, “There is no exchange in the Asian continent that is multi segment and has such liquidity. Once India has convertibility, Asia could actually use MCX, as India had been using the US exchanges for the last 50 years.”

So is this the perfect tale of the rise and rise of an invincible MCX hulk? Well, not quite. Party poopers for MCX abound. And the spoilers range from the inane to the rational and from the general to the specific. The biggest challenge is that only a select few understand what commodity markets are all about. The common refrain among business development guys in the MCX building is that not even all stakeholders understand much about the function of commodity exchanges. “More than half our time is spent on simply educating and training traders, brokers, corporates and professionals about what we do, who we are and what’s on offer,” complains a senior marketing operations guy at the comex, adding that if awareness levels were not so low, MCX would be trading at least five to eight times its present trading volume.

Ashok Mittal, Vice President & Country Head, Karvy Comtrade concurs that the problem is with the traditional mindset that people have with regard to commodity futures. “Awareness levels about futures market is low compared to capital markets. So commodity exchanges are investing time and money in creating awareness and setting up the market from scratch,” he points out.

Massey shares that the exchange and its intermediaries have till date invested a total of approximately Rs.50 billion on building up the ecosystem for commodity exchanges to function, through investment in spreading awareness and support companies. “Our branding investment actually goes into education, which gets us both branding in terms of image as well as future business potential,” he explains. MCX has set up its own training institute, and also employs a huge business development team. At any given time, half the team is talking to the physical markets and explaining what this market is all about, while the other half are talking to intermediaries and telling them that this is how you could service the market.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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